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Is Price Everything?
by Bill Collier
 

Several years ago in my past life – as CEO of an electronic testing equipment company which I sold in 2005 – we were exhibiting at a trade show. An attendee came up and began inquiring about our products and services. He wanted to bring his department manager by to meet me. About an hour later, he returned with his boss in tow. Before I could even introduce myself, the manager exclaimed with a scowl, “Our business goes to the lowest priced vendor! Price is everything!”

If his goal was to set the tone for our interaction, he succeeded. It was apparent that he had no interest in my view of the topic (or anyone else’s, for that matter.) I’m rarely at a loss for words, but I had never encountered anyone so obviously hell-bent on turning his company into the home of crazy-low prices. The one positive outcome of my blissfully brief meeting with him was the eventual inspiration for this article.

If I had detected even a hint of willingness to enter into a dialogue, I might have asked him how we had allowed our industry to reach a point where “price is everything.” I also may have challenged him to put himself in my place. What if his customer proclaimed, “Price is everything!” I’ll bet he would have immediately come to the defense of his company – and rightfully so. With the tables turned, his focus would be not on price, but on value – which is where it belongs.

Each company is a value chain. It’s made up of a complex set of people, facilities, materials, services and suppliers. The assembler or serviceperson may do the hands-on work, but other people contribute to the successful delivery of products and services. Like any chain, it’s only as strong as its weakest link. I submit to you that being focused on “cheapest” is asking for lots of weak links.

I doubt that anyone prefers to be driven solely by price. Of course we’re all interested in getting the best value for our dollar, whether it’s our own money or our employer’s. I also recognize the tremendous competitive and cost-reduction pressure businesses have experienced during these past few years. But I’d like to believe that, given the choice, even bean-counters would embrace value over price. (If any accountants are reading this, by the way, I use “bean-counter” as a term of endearment.)

So, what does it mean to emphasize “value”? In my mind, it goes well beyond convincing customers to look at the value of their purchase, rather than looking at the price alone. Certainly, re-training customers is an important part of the equation. But equally important is a mindset shift starting at the top and filtering down through every employee. A “value mindset” should be used whether you’re the seller or the buyer. A low price is terrific but what is the actual value to the purchaser?

Think of your own experiences, either at work or in your personal life. Did you ever buy something at what appeared to be a good price and later regret it? Such a simplistic analogy may not do the discussion justice, but you can bet everyone can relate to it, because we’ve all been there.

From a sales standpoint, you first have to recognize the value you offer and then educate buyers about it. In some cases, a low price is your value. (Walmart has done quite nicely with this value proposition.) But, if your sales force is competing on the basis of price when your business model emphasizes technological superiority, turnaround time, high quality, or some other competitive advantage – you’ve got a problem, and a mindset shift is in order.

It’s tough to resist the temptation to meet the other guy’s price. It takes guts to go out into the marketplace with a higher price. It also takes hard work. Anyone can sell if they’re the cheapest. Getting your customers to realize your added value takes effort.

If business owners and managers have the courage of their convictions and confidence in their people, products, and services, they can move from a price focus to a focus on value. We all owe it to our shareholders, our employees, and to our customers.

Bill Collier is a St. Louis-based business coach, consultant and speaker. He is the author of the book “How to Succeed as a Small Business Owner … and Still Have a Life.” His website is www.collierbiz.com, and his email is bill@collierbiz.com


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